Group Presentation Order

##                                  group_name order  day
## 1                                       VAR     1 12/3
## 2                Property Rights and Wrongs     2 12/3
## 3                                Cool_Group     3 12/3
## 4                             Pink Gorrilaz     4 12/3
## 5                                       CCT     5 12/3
## 6                                Carbon Tax     6 12/3
## 7                             We Love James     7 12/3
## 8                             The Windmills     8 12/3
## 9                               Vroom Vroom     9 12/6
## 10            Judges for Endangered Species    10 12/6
## 11                               Protectors    11 12/6
## 12 Student Coalition for the Green New Deal    12 12/6

Whiskey is for drinking; water is for fighting over. -Mark Twain

When the well’s dry, we know the worth of water. -Benjamin Franklin

So far in this class we have talked about:

In this module we will talk about:

When we “conserve” water, what are we really conserving?

Or, what is the harm of “wasting” water?

Two fundamentally different challenges

  1. From your perspective, at what point (if any) does this discussion about water rights break down or become irrelevant for the Western US?
  2. How do dramatic technical innovations fit into the economic assessment? What is the probability of the implementation of approaches that are currently considered ‘wild’ (for example, piping water from Canada and/or Alaska, large scale desalination factories and piping from the west, etc). At what point (if ever) do these become feasible?

  1. At the moment, there are clear winners and losers in the water rights systems of the western states. What would happen to the system if a technological solution were found (and implemented) that removed the concern about water supply in the region?

Water as a resource

Drought has been particularly challenging

What can we tell, and what needs to be figured out from this analysis?

The Economic Problem

How many of you pay for a water bill based on volumes?

Who is using water?

Who is using water?

Could you rank the following six sector by their water extraction?

Water extraction in the US, year 2010

Sector Percentage
Thermo power 45%
Agriculture 37%
Domestic 8%
Other Public Supply 5%
Industrial 4%
Mining 1%

But not all uses are equal

Why do we complain so much about water used for irrigation, but not for thermal power generation?

This clearly doesn’t make sense

At the peak of the California water crisis, restaurant customers have to pay for tap water. There are limits on how residents can shower.

Meanwhile, farmers in central valley are pouring water on their almonds, oranges, grapes, etc.

Why is that? Could they simply trade with each other?

Who owns water in this country?

Two set of commmon law doctrines govern the legal right to use surface water

The Riparian Doctrine

“Anyone who owns property adjacent to the river has a right to use water”

Illustration of Riparian Rights

Type of property rights

Does the Riparian doctrine satisfy these characteristics?

Then why aren’t there problems with water resources in most part of the Eastern US?

The Prior Appropriation Doctrine

“First in time, first in rights”

Additional Provisions in the Prior Appropriation Doctrine

Sample of a water right

https://www.dropbox.com/s/fprz6f5tarpyibg/Water%20right%20examples.pdf?dl=0

Problems with prior appropriation

But why prior appropriation?

Doesn’t the Lincoln-era folks see the problem we face today?

Or, putting it in another way, if you are tasked to design a way to allocate water in semi-arid part of the world (US West, Northern India, Northwestern China, or the Middle East), will prior appropriation be your choice?

Why not assigning water proprotionally?

A historical note

For a couple of reasons. What are they?

Riparian is not the best way to go

Because of the scarce nature of water in the West (and the lack of a price signal to reflect that)

Prior Appropriation

A more important incentive

Institutional arrangements

Institutional Path Dependence

From your perspective, at what point (if any) does this discussion about water rights break down or become irrelevant for the Western US?

How do dramatic technical innovations fit into the economic assessment? What is the probability of the implementation of approaches that are currently considered ‘wild’ (for example, piping water from Canada and/or Alaska, large scale desalination factories and piping from the west, etc). At what point (if ever) do these become feasible?

Wild technologies

When will these become relevant?

Marginal benefits and prices for water

Use Marginal Benefit Average Price
Domestic 1122 652
Agriculture 250 16

(Units: $/Acre Foot)

Cost of Wild technologies

Technology Cost ($/acre feet)
Surface water withdraw $4
Pumping cost from Ogallala (scarcity rent included) $300
Carlsbad Desalination Plant $2000
Dragging iceberg from Antarctica $2500 (?)
Rail shipping from Minnesota to California $160,000

Other solutions to water scarcity

At the moment, there are clear winners and losers in the water rights systems of the western states. What would happen to the system if a technological solution were found (and implemented) that removed the concern about water supply in the region?

Water Markets